At the University of Michigan, minority undergraduate applicants to the College of Literature, Science and the Arts receive a 20-point bonus on the basis of race out of a 150-point system, which takes into consideration other criteria, including academics. Scholarship athletes, for example, get 20 points. Race is covered in a category called "other factors." The point system includes:

Maximum of 40 points and only one option is assigned in the alumni, personal achievement, leadership & service, and miscellaneous categories.

Source: Center for Individual Rights

WASHINGTON (CNN) --A seemingly divided Supreme Court Tuesday wrestled with the contentious, politically charged issue of affirmative action in one of the most important cases the justices have heard in years.

At issue is whether race can be used as a factor in admissions to publicly funded institutions as part of an affirmative action program.

Justices Tuesday were asked to decide whether a state has a "compelling interest" to promote a diverse student body, or whether the Equal Protection Clause of the 14th Amendment forbids giving one ethnic group or minority special advantages over another.

Two cases were heard back-to-back. One involves Michigan's undergraduate admissions program, the other affects its law school. The political, social and economic stakes are high. The Bush administration has weighed in to oppose the university's policy, while dozens of top corporations are among those supporting the school.

And while this case is about access to education, the court's ruling could have rippling effects on affirmative action programs in job hiring and government contracts.

In court arguments, Maureen Mahoney, attorney for Michigan said the law allows schools to use "programs to achieve diversity because of the important interest it serves for students of all color."

Mahoney said the school does not used hard targets or quotas to achieve diversity, but employs what it calls a "critical mass" involving many factors, including race, when measuring its applicants.

Some conservative justices pressed Michigan lawyers over that term and percentage of minorities in the school.

"Does it stop being a quota because it is somewhere between eight and 12 percent, but it is a quota if it is 10 percent?" asked Justice Antonin Scalia. "Once you use that term 'critical mass,' you're in quota land."

Justice Anthony Kennedy also called Michigan's policy a quota system, and said "we need to get away from the notion there is some right number."

But other justices acknowledged competitive schools like Michigan seek to achieve diversity and remain a competitive school.

"A university or law school is faced with a serious problem when it is one that gets thousands of applications for just a few slots," said Sandra Day O'Connor, a possible swing vote on the issue. "Where it has to be selective and adherent in that setting is making choices about what students to admit."

Justice Clarence Thomas, the only African-American justice, made rare public remarks from the bench, asking an attorney for students suing the school if affirmative action had helped promote racial harmony and understanding. ""Do you think your admissions (policies) at least provided some head wind toward that?" he asked.

The case centers around two women, different in significant ways, but sharing the same skin color. Both say being white changed their lives.

Jennifer Gratz was a top high school student in suburban Detroit in 1995 when her application to the only college she applied to was rejected.

"The University of Michigan is treating people differently based on skin color, and that's unconstitutional," she told CNN recently.

The university openly acknowledges it uses race as a factor in admissions, relying on a point scale to rate applicants. Grades and academics are most important -- counting for more than two-thirds of the points -- but members of "underrepresented" racial and ethnic minority groups receive extra points, as do people from underrepresented geographic areas or children of alumni.

Gratz's lawyers call the racial and ethnic points a "super bonus" that are equivalent to a full point on a student's grade-point average.

"I think it's a shame that the university looks at minority students and basically tells them that they are inferior and need these points to be accepted," Gratz said.

Barbara Grutter is a 49-year-old mother of two who ran her own consulting business, and who has wide experience in information technology. Her 1997 application to Michigan's prestigious law school was rejected.

She contends the school essentially runs two admissions systems to get a pre-determined racial mix of students.

"I have a lot of experience I could have brought to that class," she said. She acknowledges people from every race encounter disadvantages, but says discrimination is wrong, whatever the reason. Both women attended the court arguments.

School: All students benefit

The University of Michigan has had its admission policy in place for over a decade. Officials proudly argue all students benefit, as does society at large.

"We educate a well-prepared, diverse workforce," university president Mary Sue Coleman said. "The students who learn in diverse classrooms know how to take that cross-cultural understanding into America's industries."

The university says both the law school and the undergraduate program have more qualified applicants than they can accept. The law school is one of the most prestigious in the country. The undergraduate program receives 25,000 applications each year, but only about 5,000 are admitted. African Americans make up about 9 percent of this year's freshman class, Latinos 6 percent, and Native Americans about 2 percent

The Bush administration supports the students who brought the lawsuit. Solicitor General Theodore Olson, arguing for the government told justices, "This plan violates every standard that this court has set for the examination of racial preferences."

Affirmative action programs originally were created to correct racial and cultural discrimination, dating from the days of slavery and public segregation. But many advocates on the issue agree the initiatives have proven controversial, and enforcement has been often been applied in a random and confusing way.

One reason is the Supreme Court's ambiguous ruling in the 1978 Bakke case, the last time court addressed affirmative action in public universities. The court at the time ruled that the University of California at Davis could not hold a set number of places for minorities.

But writing in the case, the late Justice Lewis Powell wrote, "The goal of achieving a diverse student body is sufficiently compelling to justify consideration of race... under some circumstances."

Since then, federal courts around the country have offered conflicting opinions on the legality of affirmative action.

A decision in the cases is expected by late June.

The cases are Grutter v. Bollinger (case number 02-0241) involving the University of Michigan's law school; and Gratz v. Bollinger (02-0516) involving the undergraduate program.